Hello Ayong
Dampening is used to temporarily prevent changing network conditions from repeatedly installing and removing routes from BGP tables. If you still need to reach 1.1.1.1/32, well that’s life 
. What I mean is, there’s nothing you can do. You must simply wait until the network stabilizes, and until the penalties expire to be able to reach that network once again.
You suggest that the Lo0 interface can be shutdown to resolve the issue. Well, if you’re an admin, would you be able to determine that quickly enough to go in and shut it down? And if you do, when will you bring it back up again?
If you’re suggesting that the BGP process automatically shut down Lo0 to resolve the issue, then yes, for this topology, this would work, but what if that is an interface that connects to several other BGP routers? If you shut down that interface, you would not only lose connectivity to the network in question but to all networks reached via that interface.
Does that make sense?
I hope this has been helpful!
Laz